Dropshipping essentially means instead of buying inventory you display products – which are housed in a dropshipping wholesalers warehouse – on your own website.
When the sale is made, you purchase the product from the wholesaler who packs and ships the product directly to your customer. As the retailer, your profit is made from the markup you put on the product. It’s that simple – at least most of the time.
The main advantage of dropshipping for entrepreneurs – especially if they’re new to ecommerce – is that you don’t need to carry any inventory. This significantly reduces both the upfront costs and risk involved with starting your new business.
But, as you can expect, there are some pros and cons to this particular ecommerce business model, so let’s examine them further.
Pros and Cons Of Working With Dropshipping Wholesalers
While a great entry point to the ecommerce industry, dropshipping is not a business model to enter into lightly, as the reality is, you’ll be in near-constant contact with your dropshipping wholesaler.
And working with the wrong supplier can cause you a world of transatlantic problems that you end up trying to solve while making no money. No bueno.
3 Main Pros of Working with Dropshipping Wholesalers
- It costs very little to get started. This means it’s good for experimenting with ecommerce until you find a profitable niche.
- There are quick and easy expansion opportunities. You can focus on marketing and let your dropshipping wholesaler focus on logistics.
- It’s easy to change niche or market if your idea or marketing campaign fails to take off.
- Saying that, dropshipping is not without its drawbacks. It’s important to consider these disadvantages, especially if your long-term vision is to build a brand that evolves into a household name.
3 Main Cons of Working with Dropshipping Wholesalers
- You can’t offer a branded experience in your packaging without paying significantly more.
- You’ll have slower shipping times, which means you’ll have to deal with a lot of customer service questions.
- Since you have no idea what’s being shipped to the customer, you can’t be sure of the quality.
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